You may have heard that it’s possible to raise your FICO credit score by becoming an authorized user on the account of someone else who has a high score.
FICO addressed that in a recent issue of their online newsletter, Ask myFICO. The short answer is that FICO is changing its credit scoring formula so that it no long considers accounts on which you are an authorized user but not actually responsible for the account. You can learn more about FICO scores at www.myfico.com.
Here’s the full message from FICO:
First a bit of background: FICO® scores originally considered authorized-user accounts because our scientists found that in some cases that information can help us determine a person's credit risk. By coincidence, some people found it also was a way for a parent to help another family member establish a credit history. For example, a parent might add a teenager as an authorized user to an existing credit card account. The teenager could learn how to use the credit card under the watchful eye of the parent, without being financially responsible for the account. Since the bank would report the account history to the teenager's credit bureau file, it also helped the teen start building his or her own credit history.
While this practice began with good intentions, recently several websites have begun offering services to boost a FICO score by adding their customer as an authorized user to a complete stranger's credit account in good standing. The customer never actually gains access to the credit account. Instead, the arrangement intentionally misrepresents the customer's own credit history to the FICO scoring formula, as well as to lenders and other businesses. Courts and government agencies have yet to rule on whether this practice is legal. However, to protect FICO scores, Fair Isaac is changing its FICO scoring formula so that it will no longer recognize authorized-user accounts.
So, to answer your question: no, we would not recommend that you be added as an authorized user to someone's credit card just to raise your FICO score. However, there are definitely things you should know about your FICO score and establishing your credit history – this free booklet is a good place to start. You might also benefit from hearing what people are saying about establishing credit on the FICO Forums.
Trying to buy a home when you have a limited credit history can be difficult, but be wary of web sites stating they can boost your FICO score to help you qualify for the best rates on a mortgage. In fact, some of these sites may be advising you to commit mortgage loan fraud – such as by providing false financial documents in your loan application.
Sorry to say, there is no quick solution to building up your credit history – like getting into shape; it takes time and diligence. Hopefully, we've provided some advice to point you in the right direction. Almost as important as knowing the things you can do to establish your credit is knowing the things you shouldn't do! From all of us at myFICO, we wish you success in building your credit and finding your dream home.